Worcester manager seeks tax exemptions for industrial park

Sunday

Nov 25, 2012 at 2:00 PMNov 25, 2012 at 2:48 PM

By Nick Kotsopoulos TELEGRAM & GAZETTE STAFF

In an effort to spark greater interest in the long-stalled South Worcester Industrial Park, as well as enhance its marketability, the city administration wants to be able to provide real estate tax exemptions to developers based on the size of the building to be constructed and the number of jobs to be created and retained over a set length of time.

City Manager Michael V. O'Brien is asking the City Council to designate city-owned parcels within the 11-acre industrial park as Site Specific Economic Opportunity Areas, with terms of up to 20 years for certified project designation under the state's Economic Development Incentive Program.

Such a designation would enable the city to offer tax increment financing deals, also known as TIFs, to companies that want to relocate and build on the city-owned parcels within the industrial park.

Mr. O'Brien said the proposed TIFs for those properties would offer an exemption percentage between 40 percent and 100 percent on the taxes generated by the new construction over 10 to 20 years.

Through tax title, the city has acquired and currently owns about 8 acres within the park.

“It is my hope that by offering a creative, flexible incentive as a tool for redevelopment, the city will be able to realize the maximum redevelopment potential at the South Worcester Industrial Park,” Mr. O'Brien wrote in a report that goes before the City Council Tuesday night.

The South Worcester Industrial Park, also known as SWIP, is a brownfield site that the city has been trying to redevelop since it was originally proposed back in 1994.

The park is north of Southbridge Street and includes properties along Canterbury Street, Southgate Street, Southgate Place and Armory Street.

Past uses in that area included foundry, cast metal manufacturing, textile machinery, manufacturing and automobile salvage. All those uses contributed to existing environmental contamination within the industrial park site.

The SWIP project involves the environmental remediation and demolition of blighted buildings and structures to create pad-ready development sites for private businesses.

The hope was to someday create as many as 1,760 new jobs within the industrial park, but while millions of dollars have been spent over the year cleaning up the environmental contamination, no new jobs have yet to be created.

Timothy J. McGourthy, the city's chief development officer, said the city to date has demolished buildings formerly located at 65 Armory St., 17 Southgate Place and 25 Southgate St. He said necessary infrastructure improvements have also been completed.

Upon the completion of the final demolition and remediation activities, up to six development parcels will be available to disposition and development, Mr.McGourthy said.

He added that could generate about 180,000 square feet of new industrial/commercial space, thus creating new jobs and new tax revenues in the process.

To that end, Mr. McGourthy said his office is seeking approval of the Site Specific Economic Opportunity Areas and a TIF tax-exemption schedule scenarios that provide TIF plan lengths and real estate tax exemptions based upon the size of the building to be constructed and number of jobs to be created and retained.

For example, a company that constructs a building of 5,000 to 9,999 square feet and creates less than 10 jobs within five years would receive a 40 percent tax exemption on the value of the new construction for a 10-year period.

Meanwhile, a company that constructs a building 35,000 square feet or greater and creates more than 45 jobs within five years would receive a 100 percent tax exemption on the value of the construction for a 20-year period.

Mr. O'Brien said the city can offer such an incentive through the state's Economic Development Incentive Program.

Under the program, which may be utilized by manufacturers, retailers, commercial office users or industrial businesses, participating companies may receive state and local incentives in exchange for job creation, manufacturing job retention and private investment commitments.

Mr. O'Brien said the collaborative effort between the state and city offers local and state tax incentives to qualified businesses that choose to start up, expand or relocate in or to Worcester.

To utilize the program, the manager said a municipality has to designate an area of particular need and priority for economic development. He said the area must meet the state definition for an area that is blighted, decadent or substandard.

Mr. O'Brien said the South Worcester Industrial Park meets the criteria.

If the program is approved by the City Council, Mr. McGourthy said the TIF exemption schedule scenarios will be included in requests-for-proposals to be issued for the sale and development of the city-owned parcels in the SWIP.

He said the RFPs will include language that clearly states that any and all project proponents requesting the certified project designation of a city-owned parcel at the SWIP must seek the recommendations of the city manager and approval of the City Council.

In addition, the actual length of the Site Specific Economic Development Opportunity Area for a city-owned parcel will be determined by the city manager based on the proposed project and the TIF exemption schedule scenarios.

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